Financial Advisor Training – Real World Advice from a Successful CFP (R)

If you are interested in becoming a financial planner, the bad news is that there is no school that provides financial advisor training.

But don’t be discouraged. I’ve been a professional financial planner for more than 25 years and there are a few things I’ve noticed about successful professionals that may surprise you:

1. Don’t start off in this as a side job.  It won’t work.  You need 100% focus .
2. Knowledge is very important – but other skills are far more important.
3. You can start your training without spending a dime.

This subject really requires more than one post, but let’s just start off with the basics of what goes into financial advisor training.

1. Before you get started, be clear on why you want to be in this business.

Do you love helping people? Do you already understand how money works? Do you find that others are naturally drawn to you for financial advice? These are all great indicators that you are headed in the right direction.

If, on the other hand, you simply want to make more money and see this career as a way to do that, I suggest you reconsider. Oh sure…you can do really well in this industry. But if all you want is to make lots of money for yourself, you’ll probably fail. Clients are smart. They’ll see right through you. If you want to know how to make a business successful, focus on your clients. This is an industry built on trust and respect. If you lose either, you might as well go home. Done. Game over. Insert quarter.

Don’t do all the work to try to build a business with greed as your foundation. It will crumble. I’ve seen plenty of people who are much smarter than I am fail for that reason alone.

Get it? If you are just trying to make a buck…this job ain’t for you.

2. Decide how you want to work.

If you love buying and selling stocks and you’re good at it – become a stock broker. There is absolutely nothing wrong with this. You’ll work on commissions (probably) and start off at one of the major stock brokerage firms.

If you prefer to help people make smart decisions about their finances and talk about their overall financial situation, you’ll want to become a Certified Financial Planner eventually. It takes a while to actually complete this course of study, so you might as well start sooner rather than later.

This training, while providing a good foundation, is not sufficient. You’ll need more – but I’ll get to that. Also, don’t wait to launch your career until you become a CFP. You can start immediately and work on the CFP certification on the side. I started in this industry in the mid-80’s but I only got my CFP (R) certification in 1994.  People don’t mainly choose a financial planner based on them having or not having the certificate.

3. Background You’ll Need

Money concepts should come easily to you. One way to get this ability is to launch your own very small business. Being self-employed is the best classroom you could find.

When I was 16, I started painting address numbers on curbs for a company that paid me $2 for every curb I painted. I had to do the selling and the painting and I also paid for the paint. After two days I realized that I had all the risk and was doing all the work, so I quit. I went out and bought my own stencils and launched my first business. I bought my first car with the money I earned painting address numbers on curbs. I also learned invaluable lessons about the value of a dollar and how to run a business.

What can you do on your own? It doesn’t matter how small the business is…just do something on your own. It’s a great way to learn.

You can also acquire this skill by working for a small company. It doesn’t matter what company it is or what they do. Just get in with a small company that will give you the opportunity to work really hard and advance. You want to get as close to the owner as possible. You want to see how she thinks. How she makes decisions. What she values. This will help you understand how your clients think (even if they aren’t small business owners) and it will also help you run your business later on.

Get as much work experience as you can. This will be much more valuable than anything you learn in school or how much money you make in the short run. Trust me on this one.

4. Education and Licenses

In a perfect world, you’ll have a bachelor’s degree in business with an emphasis in accounting or finance. You could also have a degree in economics. If you are smart and money concepts come easily to you, you’ll do just fine with any degree…but either way you must have excellent communication skills.

Could you be a financial advisor without a college degree? I suppose. But very few firms will hire you and fewer clients will trust you with their life savings if you haven’t demonstrated the ability and commitment to get your undergraduate degree.  If that describes you, there are other good jobs without college you should target. They are out there.  Don’t worry.

But while we’re on the subject of education, I need to tell you that formal education (even the advanced certification programs) are, for the most part, admission tickets and little else. Your background and experience are going to be much more valuable to you as you advance your career. You need the formal education just to get in to the game.

As long as you are in school, get as much writing and public speaking experience as possible. Take as many business writing courses as you can. Join groups and clubs that give you the opportunity to practice and improve your written and oral communication skills. This is the very best advice I can give you.

As far as licenses are concerned, it depends on which direction you go in. If you decide to become a stockbroker, you’ll eventually need to get a securities license and pass an exam known as the Series 7. This allows you to buy and sell stocks and mutual funds for commissions. In my day, you had to get a broker/dealer to “sponsor” you before you could take the test.

That being the case, if you decide to become a stock jockey, don’t sweat it. The firm that hires you will set you up with study materials and exam dates. It’s not a big deal.

If you become a financial advisor, you’ll still need to pass some exams if you want to sell financial products. The Series 6 allows you to sell mutual funds. If you also want to sell insurance, you’ll need an insurance license, which is offered by the state you live in. You have to study and pass some tests, but don’t worry about that either. Your firm will arrange these for you.

You could also become a Registered Investment Advisor. That’s how I work now. It’s a completely different career path. We don’t work on commissions at all. I’ll cover that in a different post.

5. Your First Job

There is a narrow list of companies that hire rookies, but don’t get discouraged.

Insurance companies and the major stock brokerage firms will take you, but be advised – they’ll probably want you to make a list of 100 people you know and then tell you to go sell something (anything) to them.

I didn’t go that route. I got my start in a bank and this was fantastic. Many banks and credit unions hire financial advisors with little or no experience. That’s exactly what happened to me. I certainly recommend talking with the banks about opportunities.

If you do go this route, be patient because things have changed since I was a rookie:

1. They may force you to work your way up. In fact, they may start you as a teller then move you to new accounts before allowing you to work as a financial advisor. If your bank works this way, plan on spending a year (at least) before working as a financial advisor.

2. The second problem is that many banks like you to sell junky annuities.

Mutual funds and other long-term investments subject clients to risk. Bank clients don’t usually like risk. They are used to having little or no risk in fact. That’s why the banks sell annuities. Fixed annuities don’t have market risk and they pay fat commissions to the bank. A win-win for the bank but a lose-lose for your clients.  If your would-be employer asks you to sell annuities to clients, I’d look for another employer.  As you may already know, I think annuities stink and I can’t think of many people who should buy an annuity.

In summary, be clear on why you want to get into this business and have a clear direction in mind. That will help decide what training you need. You can get much of the background you need by simply working in a small business. The formal education you need is the least important element. You’ll learn most of what you’ll need by simply getting in there and doing it. Your first job will require lots of sacrifice and hard work, but over the long run it will be worth it. At least that’s what I’ve found to be the case.

If you are a financial advisor, what other tips would you add?